R200m Limpopo pipeline ‘illegal’

A R200 million Limpopo pipeline contract has been declared illegal and invalid – but the firm that was awarded the tender will be allowed to complete its work, in the public interest. This is the ruling of Pretoria High Court Judge Elias Matojane, who also had strong words to say about the two losing bidders who brought the case to court. The contract, which was awarded to the Tlong Re Yeng/Base Major joint venture, has been on hold for more than a year as a result of the vicious court battle which entailed several interdict applications, counter-applications, and allegations of collusion and improper conduct by the lawyers in the case.

Losing bidders and pipeline specialists, Esorfranki Civils and Cycad Pipelines, launched the proceedings to halt work on the pipeline. They argued that the joint venture did not have the appropriate experience to execute a project of its size – which involved the construction of a 51km bulk water pipeline between the Nandoni and Nsami dams. The pipeline was commissioned by the Mopani District Municipality, and is meant to serve about 90 villages in and around Giyani which currently survive on poor-quality borehole water. Judge Matojane said the joint venture should never have been considered because it did not have the correct Construction Industry Development Board grading.

The lead partner, Tlong Re Yeng Trading, is owned by Constance Malebate whose brother, Selby Manthata, has several businesses with Limpopo premier Cassel Mathale. The court found that if the municipality had properly inspected the joint venture’s credentials, it would have found it had lied about where its offices were, disqualifying it for locality points. Tlong Re Yeng also had “no employees, assets or income” and Judge Matojane found that Malebate lied about the number of years her company had been in business. And her business partner, Jinpu Lu, a Chinese national, had lied about his citizenship. “The joint venture bid cannot be regarded as ‘acceptable’ in that it does not comply with the specification and conditions of the municipality’s own bid document and [the award] was accordingly irrational, arbitrary and unreasonable.”

However, Judge Matojane continued, this did not automatically mean that the losing bidder, Esorfranki, would be entitled to complete the contract and awarding the remainder of the contract to Esorfranki would not have been just and equitable and would “not serve the purpose of ensuring that water is brought to the destitute communities”. This was because various complex issues needed to be considered, such as ownership of building materials; whether it was legal to give the balance of the contract to another company; or whether it should instead be put out to tender. The court ruled that the public interest would be served by the municipality independently verifying that all work done met the required standards. The joint venture would have to pay for the verification.

Criticising the way in which the losing bidders had handled the case, Judge Matojane said the companies were clearly not independent of one another “despite protestations to the contrary”. They had formed a joint venture that won an R864 million tender to build the Western Aquaduct in KwaZulu-Natal. A court later nullified that award. “The conclusion is inescapable that [Esorfranki and Cycad] have embarked on a deliberate strategy to attack the flanks of the municipality simultaneously in a pinching motion until it capitulates and awards the contract to Esorfranki,” Judge Matojane said. He also chastised their lawyers for using allegations of corruption and fraud to attack the defence’s legal team. He referred his judgment to the Law Society of the Northern Provinces to investigate the conduct of Esorfranki lawyer Stephen Thomson, and the municipality’s lawyer, Chris Mahowa, in their handling of the case.

Judge Matojane also ordered each party to pay their own legal fees, “because of the unreasonable and unconscionable manner” Esorfranki, Cycad and Thomson had handled the case. Thomson told The Sunday Independent that Esorfranki would appeal the ruling. He also questioned the fact that the Tlong Re Yeng joint venture would be allowed to continue building the pipeline. “[My clients] are shocked at what appears to be a condoning of corruption,” he said. Meanwhile, Mahowa called the ruling “fair”, saying the law society was the appropriate body to decide on lawyers’ conduct. He said he did not have instructions from the municipality to launch an appeal.

Mopani District municipal manager Tim Maake said the municipality was still studying the judgment, and had not decided whether to appeal or to charge anyone in relation to the irregularities.